Open 24 hrs / 7 Days A Week
Real Tax Attorneys For Real Tax Issues

Fast Action. Proven Results.


The reporting of micro-captive transactions

The IRS is always looking for ways to collect more revenue. One method is to target micro-captive transactions. A micro-captive transaction is one where a taxpayer attempts to reduce their taxable income through the use of insurance contracts.

Under micro-captive transactions, the taxpayer may claim a deduction for their insurance premiums. The insurer (the "captive insurance company") can also elect to pay taxes only on the investment income. In any case, as of the beginning of May the IRS requires disclosures concerning these transactions. And according to many tax preparers, the new reporting requirements are complex. Unfortunately, the failure to properly report micro-captive transactions could result in IRS action.

The new rules will require Michigan taxpayers to provide in-depth information regarding a variety of items. One tax attorney said that reporting such information "required a lot of expertise." This includes having extensive knowledge regarding the operations of the captive insurance company. And even in a just a single transaction, there may be multiple parties providing information.

We don't know if the IRS will provide additional guidance on micro-captive transactions. But as we are early in the process, there is likely to be additional changes concerning reporting requirements.

As the reporting requirements concerning micro-captive transactions are confusing, disputes concerning compliance with these requirements will likely be common. Defending against such disputes could also prove difficult for many taxpayers, and the tax penalties may be harsh. For that reason, having an attorney on your side who can provide guidance regarding reporting and who will defend your interest could be extremely helpful.

No Comments

Leave a comment
Comment Information

When you hire us, we can help: you:

  • Obtain emergency relief from IRS actions
  • Stop the IRS from garnishing your wages
  • Prevent levees from being placed on your bank accounts
  • Keep tax payments and penalties from spiraling out of control

Phone Answered 24/7

We are always available to answer your questions and put your mind at ease.

Call us today at
800-778-2741 for a free initial consultation

Competitive Pricing

We offer flat fees that fit your needs and your budget.

Read Our Pricing FAQ

What Past Clients Say About Us

I know I won't be getting those frightening letters anymore thanks to Chad Silver - such a weight off my mind!” - A. Gould, Ohio

Read More Testimonials

A Real History of Success

IRS debt of $682,437, Attorney Silver and his team negotiated the Debt down to zero.

View More Results

You Can Fight The IRS And Win. We Can Help.

No matter where you are in the process, we can help you make the best of your situation. Call us toll free at 800-778-2741 for a free case evaluation.

Get A Free Consultation »

Privacy Policy | Business Development Solutions by FindLaw, part of Thomson Reuters.

Back To Top